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Australian housing is twice as expensive as the US

The Demographia International Housing Affordability report is a widely respected annual survey of residential property across eight countries. This year’s 20th edition of the report has tonnes of great data, much of which doesn’t make for nice reading for Australia. That said, previous editions haven’t been too kind either.

The report measures housing affordability on a median price-to-income ratio, or ‘median multiple’. Then it breaks housing markets down into categories, from affordable, down to impossibly unaffordable. A median multiple of 3x or under is deemed affordable, while 9x or over is considered impossibly unaffordable.

The report only introduced the category of ‘impossibly unaffordable’ this year to describe cities where housing purchases are extremely expensive relative to incomes, topping its previous highest category of ‘severely unaffordable’.

Source: Demographia International Housing Affordability 2024 edition

Here’s how Australia stacks up against seven other developed countries.

Source: Demographia International Housing Affordability 2024 edition

Australia’s five major capital cities, excluding Darwin, Canberra, and Hobart, are considered either severely unaffordable, with price-to-income ratios between 5.1x and 8.9x, or impossibly unaffordable, with median multiples of 9x or more. The median price-to-income multiple across the five cities is 9.7x.

The chart shows that Australia’s median multiple is more than 2x the US market of 4.8x or almost 2x the UK market of 5x. The US has five ‘impossibly unaffordable’ markets compared to Australia’s three, which shouldn’t surprise given the US has a population almost 13x greater than here. China, Hong Kong more specifically, is the only market that’s more expensive than Australia.

The other thing to note is there isn’t one city in any country which has a property market deemed affordable. Singapore is the most affordable market, though 78% of the population lives in public housing.

The next chart shows how house prices have exploded across all the countries over the past few decades.

The jump in the median multiple of Australia is something to behold. In 1987, the price-to-income ratio here was just 2.8x. Even in recent years, the multiple has also seen a tremendous uplift, from 6.9x in 2019 to 9.7x now.

The chart shows that back in 1987, every country’s housing was considered affordable, under a 3x median multiple.

Other nations have seen an increase in their median multiple over the past four decades, yet Australia’s uplift has been the greatest by far. The report suggests that it isn’t just one city that’s making Australia unaffordable. Even our most affordable market is still well above other countries.

Source: Demographia International Housing Affordability 2024 edition

Home ownership rates don’t explain why Australia prices are so much higher than most. Our home ownership rate of 66% is about average across the different countries.

Source: Demographia International Housing Affordability 2024 edition

Drilling down into Australia

Sydney is the least affordable market in Australia, with a median price-to-income ratio of 13.8x. That multiple also makes it the world’s second least affordable city, behind Hong Kong. It’s not unusual for Sydney to be considered expensive on a global basis, as it’s been in the top three least affordable cities in 15 of the last 16 years, according to the report.

Source: Demographia International Housing Affordability 2024 edition

Melbourne is the second most expensive city in Australia, with a median multiple of 9.8x. Adelaide rounds out the list of Australia’s ‘impossibly unaffordable’ cities, with a median multiple of 9.7x.

Brisbane and Perth are less expensive, though still considered ‘severely unaffordable', with price-to-income multiples of 8.1x and 6.8x respectively.

The report also notes that the gap in affordability between Australian cities has widened in recent decades. In 1981, the gap between the least affordable city and the most affordable was just 2 median multiple points, whereas today it’s 7.

Source: Demographia International Housing Affordability 2024 edition

Australia has three of the least affordable cities in the top 10.

Explaining the global rise in house prices

The report doesn’t hold back on the housing affordability crisis across the developed world. First, it suggests current struggles with high costs are rooted in high prices for housing:

“Middle-income households face rapidly escalating housing costs, which is the primary cause of the present cost-of-living crisis. For decades, home prices generally rose at about the same rate as income, and homeownership became more widespread. But affordability is disappearing in high-income nations as housing costs now far outpace income growth.”

As to a cause for higher house prices, the report is pointed:

“The crisis stems principally from land use policies that artificially restrict housing supply, driving up land prices and making homeownership unattainable for many.”

It says the solution to the crisis lays in increasing land supply:

“Urban containment policies (greenbelts urban growth boundaries, densification) are designed to limit sprawl and increase density. While well-intentioned, these policies severely constrict the land available for housing. In constrained markets, higher land values translate to dramatically higher housing prices…

The housing crisis demands prioritizing [sic] the well-being of people over abstract planning ideals. The planning orthodoxy, while aimed at improving cities, has worsened affordability. This undermines the economic opportunity essential for thriving middle-and lower-income households.”

The New Zealand experiment to making housing affordable

The report lauds New Zealand for its efforts to try to address housing affordability issues:

“New Zealand provides a hopeful path forward. Recognising the crisis is rooted in high land values, new policies are proposed to open up sufficient land to accommodate demand.”

The report’s applause for New Zealand’s policies is somewhat odd given these policies have primarily promoted greater medium-density housing – something that Demographia doesn’t favour to address housing shortages.

In 2016, Auckland upzoned about three-quarters of its residential land area under the Auckland Unitary Plan. In this case, upzoning meant abolishing single-family zoning to allow for multi-unit housing. It also involved changing zoning laws to allow high density housing around transit corridors.

The encouraging signs from the Auckland moves has resulted in New Zealand rolling out sweeping legislation to allow medium-density housing across all the country’s major cities.

So, how successful have the Auckland reforms been? It’s undoubtedly led to a large increase in new dwelling starts, most of which have been multi-unit dwellings. Academic studies show that the housing stock was 4% more than it would have been without the policies from 2016 to 2020. 

The location and composition of builds has also changed. In 2015, two out of three housing permits were issued in the inner suburban areas. Five years later, the figure was 6 out of 7.

Interestingly, upzoned properties have increased in value in Auckland more than non-upzoned houses. That shows the market has ‘rewarded’ the upzoning option by ascribing it greater value.

Meanwhile, rents in Auckland have declined in real terms since 2016. They trailed the rental growth of other major New Zealand cities by some way.


House prices in Auckland have fallen sharply since peaking at NZ$1.3 million in November 2021. However, the fall came after a tremendous increase during the pandemic.

Source: Opes Partners

The jury is still out on the success or otherwise of Auckland’s reforms. They’ve certainly increased supply and seem to have stabilised rents. Whether they’ve impacted house prices is open to debate. The pullback in Auckland’s house prices since 2021 has coincided with a large rise in interest rates, so it may not just be increased supply that's caused these price falls.

A fuller picture will emerge in coming years as the zoning changes take effect across other cities.


James Gruber is an assistant editor at Firstlinks and


June 24, 2024

Better use of expensive land would help. At 78 years I am in the first of the baby boomers and like many Adelaide singles and couples of my vintage I live alone in an old home on a big block in a sought-after inner suburban suburb. I bought in 1998 for 275,000 and it is now worth over 1 million more, mainly land value. Two bus stops are within 5 minutes' walk. My large front and back gardens are now too much for me to look after, and gardeners are expensive. The building itself is old and with its high ceilings expensive to heat and cool. The sensible course would be demolition of the old building and construction of 2-4 units/townhouses or a low- rise apartment block. But local council and state government regulations do not allow demolition of "character" houses like mine or increasing its footprint. This will not only need to change but to be widely accepted and strongly promoted. I note that zoning now allows properties on main roads to be treated in this manner.

June 24, 2024

one way to increase the supply of housing would be to encourage retirees to leave australia. one way to do this would be to grant non-residents who are australian citizens all the tax concessions that residents get eg the tax free threshold up to $18,000, franking credits and the 50% capital gains discount. Give me these and I'd sell my home to some and be off like a shot.

June 24, 2024

"tax free threshold up to $18,000":
Add SAPTO, tax free threshold single $33,088; couple $29,783 each.

June 24, 2024

Problem is old ppl get a vote. Personally much closer to old than young but sapto needs to go as does refundable fr credits. Total rort and needs to be removed. Can’t believe I agree with ANYTHING Bill Shorten ever said. OMG??

June 24, 2024

"sapto needs to go":

Then Age Pensioners would pay tax. The Commonwealth clawing back some of what it had given.
Those precluded from Age Pension by Asset Test not only would not receive the saving free Age Pension but would earn less than the Age Pension and also pay tax on earnings less than the Age Pension. A further incentive to become Age Pension worthy through asset squandering.

"refundable fr credits":

Wage earners have employer deducted refundable income tax imputed to them.
Shareholders similarly have company deducted refundable profit tax imputed to them.

June 24, 2024

Things get more and more weird . Live in Australia but bolt on this bit of that country's tax law.

Bolt on fuel prices from the middle east.

Wonderful Thai street food prices,cheap .Bolt that on to life in Australia.

A universal pension is a must

Now move to a different country and bolt on Australian laws taxes etc to whichever country it is.


June 23, 2024

In the US you can roll cgt between properties and you can deduct ppr mortgage costs. Tax reform won’t fix much if anything here.

I therefore don’t think a knee jerk reaction to further persecute landlords as this will reduce the numbers of properties to rent and further drive up rental costs. Remembering rental properties typically have larger numbers of ppl living/ sharing.

The real problem in Australia is three fold. All caused by government.

1. Nimbyism supported by councils reducing/preventing supply

2. Hi taxation of permits, certificates, fees GST ETC.

3. The doozy though is every state and federal government has spent 40 years getting out of public housing then wondering why lower socioeconomic citizens can’t access affordable rental accommodation.

That being said negative gearing should be constrained to losses on the asset (like company or trust losses can’t be transferred) so no deductions on other income and CGT should go back to indexing off of the inflation rate, not 50% after 12 months. This would bring equity to the situation without demonising the only remaining landlords after the governments exit.

What about government offering guaranteed TD rate plus 1% and using to fund a massive public building campaign. SMSF’s would pile in. Insto super might too possibly.

Could be built and managed by the private sector but government owned. The government could then offer rent to buy say after two years with minimum holding periods. This to prevent some from short term attempts to profiteer.

June 23, 2024

Australia has one of the world’s largest finance sectors relative to the size of its economy (9% of GDP). Its share is larger than that of the Euro area (5% of GDP), Japan, the USA and Germany gets by with a financial sector that’s only 4%.

The Aussie banks imprudent lending for housing, abetted by the government on negative gearing and capital gains taxation. Banks have responded to these incentives by lending for mortgages rather than businesses, feeding a speculative positive feedback loop of continued rising debt and rising house prices. All while its central bank cheered from the side lines with loose monetary policy and banks access to cheap credit (TFF).

The productivity anchor for Australian economy will remain as both political parties have no interest but to provide lip service.

As put by another reader comment “National disgrace”. +1

June 23, 2024

Great article. It would be even better if it compares the productivity gain eg. Growth in GDP per person in those countries compared. Singapore is also an interesting example in that they have the planning foresight to use reclaimed land for more housing while having an ever increasing ageing population and the need for new migrants to support them. Australia does not need that solution but you would think we will use our vast supply of land to unlock their potential. Fast Trains have been talk about for years. Surely that can’t be more expensive than reclaiming land from the ocean or are we waiting for teleporting technologies to become a reality.

PS: Karl Marx would have told you that what we are seeing is a natural consequence of the advance stage of Capitalism.

June 23, 2024

Force supply to be added at the local council level, scrap negative gearing and CGT discount on property, scrap SMSF’s being able to borrow to invest in property, further restrict foreign buying. Job done. Will it happen, no. If anything politicians will just add new policies that drive up demand as they always have because that’s what they (as investors themselves) and most of the voting population want. Australians view of property as an investment asset is embarrassing.

June 23, 2024

Supply of money (mortgages) is causing demand for homes greater than the market, including councils, is supplying.

More expensive money, (larger real net interest rates) would reduce demand for, and prices of, homes.

Additions of mortgages to the Debt Mountain is making it more unstable.

June 23, 2024

Yes because decades of asset price manipulation have resulted in every man and his dog thinking they are property moguls. It’s a joke. I have directly benefited from it but I am real enough to know it has come at the misfortune to many others and willing to put my hand up and say it’s not right. Like it or not it will cause a swing to the Greens more and more as the renting voter base grows.

June 22, 2024

How has it come to this? In the so called lucky country we have hard working individuals on good incomes who cannot afford to buy or rent a place to live in.
The only way the next generation will be able to get into the housing market is if their home owning parents are prepared to sacrifice their retirement dreams to fund their kids homes.
There are no easy solutions here but something has to be done as a matter of urgency to address this.
Radical solutions may be met more positively than our policy free politicians assume.
Most Aussies would be ashamed with the current state of affairs.

June 22, 2024

"How has it come to this?":
Spending money not yet earnt.

"The only way the next generation will be able to get into the housing market is if their home owning parents ..."
or a home price crash relative to income.

"There are no easy solutions":
There are fewer solutions that do not lead to hardship but there are some easy solutions - eg larger real net interest rates.

George B
June 22, 2024

We may be heading the way of many big cities in Europe where the majority of people rent for life, ie. there exists a minority of landowners who inherit property which the majority cannot afford to buy out.

June 21, 2024

Perhaps make rent paid (capped) on your ppr tax deductible? This would put renters in a more similar position to people who own their ppr. Be interesting to see how this would model out. Unintended consequences etc.

George B
June 22, 2024

Making anything tax deductible puts more money into the pockets of consumers which as any good economist will tell you only adds to demand and further drives up prices, ie. it is inflationary, which is why the Reserve bank increases interest rates whenever it wants to bring down inflation to make mortgages more expensive thereby taking money away from consumers.

June 23, 2024

It’s not exactly the same.

RBA increases interest rates which hurts borrowers and causes them to spend less on other stuff. Also good for savers.

Making rent tax deductible lets renting taxpayers hang onto more of their own money rather than transferring it to the government to spend on good stuff ( like Snowy 2 for example).

If it’s inflationary than maybe the RBA needs to increase rates to counteract it. Good for savers bad for borrowers. It might cause home prices to drop so good for homebuyers.

But yes I guess making ppr rent tax deductible could possibly result in rental costs increasing cancelling out the purpose of the exercise which is to make housing more affordable.

Treasury would have to model it.

June 21, 2024

Very interesting read James... only thing I can't quite reconcile is "Singapore is the most affordable market, though 78% of the population lives in public housing." vs Singapore having an 88% Home Ownership rate?

James Gruber
June 21, 2024

Kyle, good pickup. Most of the public housing units are owned on 99-year leases. They're called HDBs. They're named after the Housing Development Board. It built 500,000 in the 60s and 70s to remove shantytowns and properly house locals. If you've been to Singapore, you'll recognise them because they are very small apartments as part of huge apartment blocks.

June 25, 2024

But her people has a roof over their head and avoids homelessness in the main. It’s affordable housing rather than public housing as we know here.

June 24, 2024

A portion of their superannuation can be used for homeownership, their superannuation % of income is also higher. HDB's were also built by the government, apartments that are not HDB's are more expensive........offering a range of choices for the consumer's price point

James Gruber
June 20, 2024

CC, a cynical take though I'm there with you.

June 20, 2024

This should be the number one item being debated in Parliament, but some how negative gearing and capital gains are untouchable, while an uncosted and unattainable nuclear power solution that will take 20 plus years if approved is the oppositions key election issue.

Our only hope is a big spike in unemployment driven by the RBA fighting inflation that will cause mass home loan defaults and forced sales driving down prices.

June 20, 2024

We wish..

June 20, 2024

"Our only hope is a big spike in unemployment driven by the RBA fighting inflation that will cause mass home loan defaults and forced sales driving down prices.":

Another hope would be increasing real interest rates and refundable tax credits for taxes on imaginary (inflationary) portion of interest yield.

That would make saving to buy a home without a mortgage competitive with borrowing to the hilt. Immediate demand for housing and prices would decrease.

More likely is a massive, uncontrolled, collapse in home prices due to neglect of the instability of the debt mountain.

June 21, 2024

It has nothing to do with negative gearing. If people wants to making a income loss to gamble if the property goes up or not that is a stupid investment strategy on their part. Personally, I had negative gearing when I wanted to lower down the tax bracket 10 years ago, but over time, all the properties are now positively geared and the tax bracket changed so no matter that happens I cannot be lowered into the next tax bracket.

As for capital gain tax discount, that is another debate, considering some countries do not have any capital gain tax at all, so competitive wise, Australia is lagging.

In case people do not know what negative gearing looks like on a balance sheet. If you look at a group of companies type business, if one arm of the business makes a loss, the collection of businesses can still be making a profit after you minus the losses from one business. This principle is the same if you apply it to someone holding properties, their main income is a salary, the other income or losses are the properties they hold, so any losses from property is taken away from the total income of that person. This is why, you cannot change negative gearing easily, it is like saying if any businesses are making losses, you just have to suck it up and still pay all the taxes you made from all your income stream as it is. It will then be a case of head I win, tails you lose, what business will be willing to do that if the Australian government does that?

June 21, 2024

Nothing to do with negative gearing? Fine. Let’s get rid of it.

Bob T
June 23, 2024

US income tax rules allow only maximum $3000/year tax shelter (i.e., negative gearing) between different earning activities for passive earnings such as renting out residential property (unless taxpayer qualifies under strict test for being in real estate business).

Open slather negative gearing gooses property prices to level unattractive for positive gearing type investors such as this dual citizen Aussie/Yank . . . so I stick to share market which otherwise has similar tax treatment as property (except for full capital gain exemption in Australia for selling residence, but that's a different tax lurk altogether to game). On the other hand, the share market has advantages of no up-keep and no dealing with tenants, assuming that one is sensible long-term investor and doesn't treat share market as short-term get-rich gambling casino. Get rich slowly by miracle of compounding.

June 20, 2024

Labor has opened the floodgates and started letting in 500,000+ migrants per year into the country. Most of these new arrivals liquidate their assets in their home country and then look for a home here. They compete with our young at auctions (which are so common these days) and guess who wins? Case of supply versus demand. No wonder the price of homes keeps going up. Maybe we should start looking at the cause of our present housing problems instead of blaming the older generation.

James Gruber
June 20, 2024

Tom, you may be right though I think the majority of the migrants over the past 2yrs have been students, and students don't buy houses.

George B
June 21, 2024

"students don't buy houses".
But they do add to demand for accommodation which reduces vacancy rates which leads to increased rents/yields which encourages investors to pay higher prices.

June 25, 2024

Oh YES they do, the mainland Chinese rich kid students do so from the everlasting Bank of Mummy and Daddy. Take a look at the girls walking around with brand new, REAL designer handbags and the boys with their brand new cars. They live in the CBD or the very nice areas of town; I heard of big houses in Burnside SA and Toorak VIC being bought, just for them to live in.

Andrew Smith
June 21, 2024

The claim '500,000+ migrants per year into the country' is a misunderstanding, not helped by the media describing NOM net OS border movements as 'immigration', suggesting permanence.

However, it's simply short term 'data noise' as international education, tourism etc. catch up after a precipitous decline due to Covid and closed borders.

It's simply those staying for 12/16+ months, temporarily and dominated by international students, Kiwis and backpackers; deemed to be 'net financial contributors' of $Billions in GST and any permanence comes under the annual cap of 190k (formal or permanent immigration is not unlimited) and is dog whistled incessantly (appalling look from outside Oz).

One wouldn't be betting the future and house price support on high temporary churnover, as in the permanent population the boomer 'bomb' is transitioning to retirement, that may correlate with stagnant median house prices of past decade i.e. barely doubled in Sydney, worse elsewhere; FIRE PR?

June 20, 2024

The US has fixed rate mortgages over 30 year periods. A lot of Americans renegotiated those loans when covid hit so their mortgage costs are fixed at low rates. Australia has variable rate mortgages and are hence more volatile.

George B
June 21, 2024

The US also levies significant tax on the principal residence (up to 2% of its value in some states) which keeps a lid on what people can pay for a property.

June 20, 2024

Why is the solution always to open up more land and build higher density housing? We have enough housing in Australia but a lot of it is empty or occupied by asset rich/cash poor pensioners. The growth driver in Australia is negative gearing and capital gains tax which is a no go zone for any politician...hence nothing changes. Australia lives in a deluded fantasy land when it comes to remediating high house prices and rents....wanting affordable housing and rents for their grandkids whilst demanding strong growth in their personal investment properties.

James Gruber
June 20, 2024

Perhaps it needs a bit of both, Jay? I think NZ shows that supply side responses are slow moving, demand side ones can impact more short-term.

June 20, 2024

A national disgrace.
But it's good for politicians' negatively geared multiple property investment portfolios.
Which is why little will change.
Never underestimate the power of
vested interest


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